Read the headlines and you'd be forgiven for thinking we have been transported back in time.

Donald Trump and Vladimir Putin. (Credit: Reuters)

Trade wars, spies poisoned, a new Mao Zedong back in power in China, Russian meddling in foreign elections and a threat of nuclear war: it reads like a page torn from a newspaper in the 1970s at the height of the Cold War.

The threat of terrorism has been replaced with an even greater fear: the return of big power rivalry, the risk of nation-on-nation conflict, even nuclear war.

Terrorism was never the scourge of our age: devastating, yes; unpredictable; global in its reach as still ever present, but dwarfed by the potential for conflict that could cost tens of millions of lives; send the world economy into a tailspin and alter our destiny.

Nations talk less about disarmament — now they boast of their nuclear capacity and are ramping up to use it.

US intelligence believes North Korea could have as many as 60 nuclear bombs and has now tested missiles that could deliver them as far away as the United States or Australia.

Kim Jong-un threatens to turn Asia into a sea of fire, while Donald Trump openly mocks North Korea's leader as "little rocket man", warning him that Washington's nuclear button is bigger than Pyongyang's.

North Korea is now offering a nuclear moratorium in return for security guarantees and direct talks with the United States. History tells us this is unlikely, and North Korea has mastered the art of bait-and-switch entering negotiations then walking away all the while developing its nuclear arsenal.

It's not just Russia and North Korea

Around the world the risk of a nuclear breakout is growing.

Iran has done a deal to wind back its nuclear ambitions in exchange for the lifting of economic sanctions — a bombs-for-cash swap — that critics say only delays the inevitable: it will eventually be a nuclear-armed state.

Saudi Arabia, in a deep power struggle with Iran, would likely follow.

Pakistan and India are locked in a nuclear-armed existential stand off.

Japan is the only country to have suffered a nuclear attack twice, in Hiroshima and Nagasaki, and it has no plans to develop a nuclear weapons program. It has a pacifist constitution and is protected under America's "nuclear umbrella".

But Prime Minister Shinzo Abe is expanding military spending and moving to reset his country's military posture as the regional threats grow. There are big "ifs", but analysts believe Japan would have enough nuclear material and knowhow to fast-track the bomb.

The threat remains, too, of nuclear terrorism: a crude device — a dirty bomb — that could fall into the hands of militant groups.

Mr Putin's address was part show-and-tell; it came with its own video of a Russian cruise missile strike on what looked like the US state of Florida.

In a two-hour speech, Putin devoted more than half an hour to his nuclear arsenal, telling the Russian people: "We must take ownership of our destiny."

Mr Putin had a warning for the West: "No-one has managed to restrain Russia."

He said that Russia is "not threatening anyone, not going to attack anyone". But, he added, "I hope that everything that was said today would make any potential aggressor think twice... Russia is ready for this."

Mr Putin was responding to developments in American missile defence systems that he sees aimed at Russia.

The recently released US Nuclear Posture Review identified Russia as a competitor: it has more nuclear weapons than other potential threats, China and North Korea.

The review seeks to increase America's capacity and broaden the trigger for use of nuclear weapons.

It stresses that the US "would only consider the employment of nuclear weapons in extreme circumstances", but those circumstances now included "non-nuclear strategic attacks".

The Bulletin of Atomic Scientists says "the tone of the new report is alarming about the security environment, arms control efforts are sidelined, and modernisations and new weapons systems have been brought to the forefront".

Simply put, reducing nukes is giving way to rearming, more powerful weapons and a greater risk of using them.

Putin's 'strategy of chaos'

Vladimir Putin has recast the global balance of power.

His interventions in Ukraine, Crimea and Syria have challenged Western powers.

The US National Security Strategy released in December 2017, names Russia — along with China — as challenging "American power, influence and interests, attempting to erode American security and prosperity".

The strategy says the two countries are a threat to freedom and fairness as they "grow their militaries" and "repress their societies and expand their influence".

Mr Putin presents himself to his people as a strongman standing up to the West. He laments the end of the Soviet empire and rejects any expansion of NATO power into his sphere of influence.

In a recent essay in The American Interest journal, Peter Doran and Donald Jensen, both from the Centre for European Policy Analysis, said: "Kremlin leaders still regard themselves as players in a great-power competition with the United States and Europe. And they harbour a grudge: they believe that the international system treats them unjustly."

Mr Putin, they say, has embarked on a "strategy of chaos", sowing instability to enhance Russia's own security.

Mr Doran and Mr Jensen argue that Russia need not defeat the Western powers, only "keep them confused, uncoordinated, and off-balance". This is Mr Putin's tactic, from intervention in the Middle East, allegedly meddling in foreign elections, to boosting his nuclear firepower.

Critics doubt he even has the weapons he now boasts about, but that is not the point: this is about political posturing and the projection of power.

Mr Putin's "chaos strategy" masks fundamental weakness: Russia's had a troubled economy and deep social problems, its military has been dismissed as second rate.

Yet, as former US secretary of state Condoleeza Rice and former defence secretary Robert Gates wrote together in 2015: "Putin is playing a weak hand extraordinarily well because he knows exactly what he wants to do."

The days of Russia laying claim to being a superpower are past, but Mr Putin believes it still is, and he says he has the nuclear weapons to back it up.

Matter of Fact with Stan Grant is on the ABC News Channel at 9pm, Monday to Thursday.

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